Correlation Between CleanTech Lithium and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium and Ferrexpo PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CleanTech Lithium and Ferrexpo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Ferrexpo PLC, you can compare the effects of market volatilities on CleanTech Lithium and Ferrexpo PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CleanTech Lithium with a short position of Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Ferrexpo PLC.
Diversification Opportunities for CleanTech Lithium and Ferrexpo PLC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CleanTech and Ferrexpo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC and CleanTech Lithium is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CleanTech Lithium plc are associated (or correlated) with Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of CleanTech Lithium i.e., CleanTech Lithium and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Ferrexpo PLC
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Ferrexpo PLC. But the stock apears to be less risky and, when comparing its historical volatility, CleanTech Lithium plc is 1.43 times less risky than Ferrexpo PLC. The stock trades about -0.03 of its potential returns per unit of risk. The Ferrexpo PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,780 in Ferrexpo PLC on November 3, 2024 and sell it today you would earn a total of 1,300 from holding Ferrexpo PLC or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Ferrexpo PLC
Performance |
| Timeline |
| CleanTech Lithium plc |
| Ferrexpo PLC |
CleanTech Lithium and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Ferrexpo PLC
The main advantage of trading using opposite CleanTech Lithium and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium position performs unexpectedly, Ferrexpo PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| CleanTech Lithium vs. Electronic Arts | CleanTech Lithium vs. LPKF Laser Electronics | CleanTech Lithium vs. Compal Electronics GDR | CleanTech Lithium vs. Summit Materials Cl |
| Ferrexpo PLC vs. Fevertree Drinks Plc | Ferrexpo PLC vs. SBM Offshore NV | Ferrexpo PLC vs. Monks Investment Trust | Ferrexpo PLC vs. Ebro Foods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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